Media firm Rappler scorns Constitution by getting foreign money

The Philippine Constitution’s Article XVI, Section 11 is categorical: “The ownership of mass media shall be limited to citizens of the Philippines.” Indeed, even in an era of free-flowing capital, most countries in the world have maintained their restrictions on foreign capital in their media. For good reason, since only its citizens must have primary control of the means of forming public opinion.

Yet the web-only news outfit rappler.com — which had been one of former President Aquino’s supporters in media and now President Duterte’s fierce critic — has boasted that two American companies, Omidyar Network, Inc. and North Base Media, last year made substantial investments in it.

Foreign funds in a media outfit: Rappler’s announcement Nov. 05, 2015

“We are excited to be investing in Rappler,” the news website in its post on November 5 last year quoted an Omidyar Network official as saying in an article entitled “Omidyar Network invests in Rappler.” Earlier, in May, it reported that another US firm, the “investment company North Base Media (NBM) has invested in Rappler.”

Omidyar is funded by the French-American Pierre Omidyar, who had set up what is now one of the biggest online retailers, eBay, while North Base Media is an investment firm, which its website says is “focused on media, journalistic and digital-driven opportunities in growth markets.”

Omidyar and North Base Media claim their investments in Rappler are not motivated by pecuniary goals. Omidyar is a philanthropic enterprise while NBM, its managing partner Marcus Brauchli informed me through email, is in Rappler only so it can get its “advice on digital trends and media in Asia.” Yeah, right.

The biggest Filipino shareholder of Rappler, on the other hand, claimed — without providing me with documents to prove so — that the foreign money will be used only for “operations overseas.”

Why have Rappler and the two US companies refused to disclose the amount of their not-for-profit investments in Rappler?

If the foreign money is for some noble purpose, for example that it would strengthen media in the Philippines and contribute to its democratization, then why can’t they say how much these are? Why are they supporting a move that scorns our Constitution?

P100 million?

The two US outfits’ investments in enterprises elsewhere are at least $1 million each. If they each invested such amount, then Rappler would have received $2 million. That would be P100 million, or twice the P50 million Rappler has spent in the past four years. No wonder Rappler has been able to invest huge amounts of money on technology and web-tricks to draw traffic into its website, and to draw in hundreds of thousands of viewers.

If they can do this, then any foreign company — even those from China (People’s Daily?) and Russia (Russia Today?) — can do so too and set up a website that would be totally different from Rappler’s indisputably pro-American stance. If an eBay-related firm (Omidyar) is allowed to invest in Rappler, then the Chinese alibaba.com (the biggest online retailer on the planet) could enter the country’s media industry — so what kind of media will we be getting?

For an enterprise engaged in media — an industry sworn to noble principles of transparency and nation-building rather than profits — Rappler adopted dubious legalistic means to skirt the Constitutional provisions.

NBN founder Brauchili in his email to me inadvertently hinted at this, claiming that Rappler “has established a structure that has allowed it to access (foreign) capital, in a manner compliant with Philippine law,” and NBM participates in that. Was he told that this “structure” is a flimsy one, which could be easily torn down when a case is brought against it in court?

Rappler practically boasted how this “structure” allowed it to skirt the constitutional ban on foreign capital in media in its article that reported NBM’s investment in May: “Rappler is the first and only media startup in the Philippines (that uses) Philippine Depositary Receipts or PDRs to (get foreign investments).”

PDRs patently defy the Constitution’s limits on foreign investments in certain industries that only three powerful firms with obvious political connections have dared use it. Its machination is to pretend that a foreign firm doesn’t really technically own a share in a company in which foreign capital is restricted or banned, but only gets whatever income the “underlying” share generates.

For decades, the Securities and Exchange Commission allowed this artifice to be used in the form of PLDT’s “American Depositary Receipts” (listed in the New York Stock Exchange) to prevent a disruption of American-owned shares in PLDT, when the treaty allowing US investments in public utilities, the Laurel-Langley Agreement, expired in 1974.

It was the Indonesian magnate Anthoni Salim though who used PDRs in a massive way to skirt the Constitutional ban on foreign capital on media firms.

In 2014, ePLDT, a subsidiary of PLDT — which is in violation of the Constitution since it is owned 76 percent by foreigners, way beyond the Charter’s 40 percent limit— put in P2.5 billion its subsidiary Hastings Holdings, masked as PDRs.

P4B for Belmonte

The money was used to raise the reportedly P4 billion it paid for the controlling 51 percent equity of Philippine Star, held by the family of Feliciano Belmonte. The Speaker of the House of Representatives at that time, Belmonte was intensely campaigning to remove from the Constitution its restrictions on foreign capital in certain industries, where Salim was based in.*

Cignal TV in 2013 was also massively funded through a P10 billion investment from ePLDT, disguised as PDRs. No wonder Cignal TV in a few years’ time, zoomed to become the country’s biggest satellite-to-home TV network.*

Since the Aquino government through its Securities and Exchange Commission looked the other way from Salim’s violation of our Constitution, Rappler apparently followed suit.

Especially with the worldwide web becoming more and more the Filipinos’ source of information, it is high time for Congress to find out why Rappler — and according to its article, ABS-CBN and GMA7 — has been allowed to skirt the Constitutional ban on foreign capital in media, and to plug the legal loopholes allowing them to do so.
The dire implications for allowing foreign capital to control media are just mind-boggling: A country’s media is the embodiment of its nationhood.

Why would Rappler get foreign money that skirts Constitutional limits, which would dent its credibility, and would even make it vulnerable to suits by a government that’s not supportive of it?

While one of its owners had boasted that Rappler has been so successful that it has set up an Indonesian subsidiary, has it spent too much on technology and other web tricks to expand its traffic — without the commensurate income — so that it is now financially bleeding? Indeed, the idea just five years ago of websites raking in advertising money has proven to be a huge fallacy. Ever wonder what Rappler’s “mood” charts are for? A source alleged that Rappler has been selling this “big-data,” the links between news stories and reported moves, to US firms.

Whatever the reason that Rappler has sought overseas money, what kind of country have we become that we no longer are outraged at foreigners’ trampling on our Constitution?

On Monday: Who owns Rappler?

*For details see Chapter 8 (Salim’s Media Empire: Ultimate Transgression of PH Sovereignty) in my book, available in most Metro Manila National Book Store branches and Popular Bookstore. Online orders free delivery in Metro Manila: rigobertotiglao.com/book:

What would be gained by the reading public if foreign media corporations are given license to operate in our midst, may I ask? What needs changing? Our laws or our understanding of free market place of ideas? I think what is more primordial is for media to stick to giving out nothing but the facts devoid of any dressing up!

Heard of the HANGED, DRAWN AND QUARTERED court practice prevalent in our PH Judicial system? It is a corrupt law practice involving RTC judges, CA and SC justices in rigging a case to favor a party. It starts with a big case, a judge who is interested in a case would approach another judge (as a favor or as the briber himself or herself) to dismiss a case based on technicality; and when the case is dismissed and it is appealed, the same corrupt judge approached the CA justice, the ponente and does it all over again, asking the justice to dismiss the case on appeal (as a favor or give a bribe); and after the second dismissal the poor defeated litigant now has a slim chance of the SC entertaining his petition for review. If the petition for review is received, this same corrupt judge would ask the SC receiving clerk to look for some flimsy technicality to dismiss the petition. If they find one, it’s the end of the case. If it goes to the SC in division, tis corrupt judge then goes to the researcher of the SC justice ponente and does his/her modus all over again. If it succeeds, the corrupt judge then goes directly to the SC justice, the ponente of the SC division and does the coup de grace. The poor helpless victim called the defeated party is left with his case not being heard and not having his day in court. The victim-defeated party being first HANGED in the RTC, then DRAWN in the CA, and finally QUARTERED in the SC. That’s where we we got the name HANGED, DRAWN AND QUARTERED. Where may I ask is Justice now in our judicial system?

We have our SC receiving donations from US-AID, AUS-AID, etc. to train and conduct seminars for future judges and justices. This is blatant,because we have our highest court being bribed openly by these foreign interested groups and our SC shamelessly is defending its constitutionality of being bribed. We will be expecting SC decision favorable these foreign interest group if ever a case is before them involving them as a party.

Maria Rappler ought to be investigated by the Senate Blue Ribbon Committee, then file a case against her if found guilty of selling her country and countrymen to foreigners. May our good LORD talk to you too, as He did our President while on the plane. Mabuhay po kayo, Sir Tiglao!

Can the senate conduct an investigation on the matter? I believe it can. it’s about time an enabling law is crafted to put penal sanctions on these foreign companies, in conspiracy with local journalists or media people, who recklessly trample upon our mother law. Thanks, sir Robert Tiglao, for a good research…

Personally, I would want that foreign limit on media ownership in our constitution removed. In this digital age, this hypocrisy should just be done with. If Americans, Chinese, Japanese, or Indonesians want to own media entities in our country, let them. Just be transparent and fully disclose who they are. So no need for Salim to use MVP, or other rent seeking Filipino elites to get into the media business. Better that way than to corrupt Filipinos and ditch Filipino rules.

Manila Times columnist Robereto Tiglao is doing the country a great service with his revelations about Rappler and other media which are now operating in the Philippines in violation of the Constitution.

I suggest that the Department of Justice lose no time conducting a thorough and impartial INVESTIGATION into these allegations–and if verified to be TRUE, to do what’s necessary to correct the violations and hold the parties responsible for them accountable legally.

“…..The participation of foreign investors in the governing body of entities in such industry shall be limited to their proportionate share in the capital thereof, and all the executive and managing officers of such entities must be citizens of the Philippines…..”

Yes sir good reporting btw can you also include the wrong report Maria published which instead, yellow wrong people of tac the report, other way around , even Coa said so, but rappler made this wrong report just to boost ther readership, btw also Atty nollora can you include this case libel against rappler

Everybody is talking about how bias this Dappler is. Maria Ressa seems confident that her American accent would make us fall for her. She is not that brainy. She thought she can manipulate Gabby Lopez and the rest in Abs-cbn. Hence, she was forced to resign.–

Is this article really about the purity of Philippine media sources or is it just sour grapes as Rappler is growing in influence vs the MT? If the author likes, Rappler can incorporate in another country. The content would not change and the availability of the service wouldn’t either. In the modern world corporations change countries of incorporation faster than a Filipino can get a tourist visa to the US. As Rappler is an internet news provider, it matters not at all where they base the company in practical terms. There is no real issue here worthy of an article.

I am just curious why the government is still allowing this bias media operates while we the nation is suffering from indignation both locally and internationally. There must be a provision in the constitution to limit the “freedom” of this media when it is obvious that they already are undermining the stability and security of this nation. What do our law makers doing watching these comedy happening right in front of our noses?

Get real. If you have satellite TV you can avail of CNN international, FOX News, Al Jazeera English, Deutsche Welle Korean and Japanese outlets. All are foreign new agencies, plus we have the traditional Filipino news outlets. You have every news agency on earth to view news via the internet. How is that a bad thing?

The idea that the media can be manipulated by foreign interests is a throwback to pre-internet/satellite TV days when people got their news from newspapers. That is a long ago age. Newspapers are dying in the printed form in much of the world. The globalization of news coverage and thought is the unstoppable trend. There are so many options for news coverage that any restriction on investment in Philippine media companies is laughable.

Yes, we can file a case we will reseach first to gather material evidence to substantiate the claims of glaring violation. If you have hard copy of the evidence kindly furnished us, at our address ATTY.EPAFRODITO NOLLORA 91 Elizalde Street, BF Homes Phas2 Paranaque City, 09391457731 email ads at Atty.Epafroditonollora@yahoo.com.So, we could file the necessary legal action.

With that question, there is a qualification that we must anchored our case on the truth, and any dole out wont affect the rigor of existence evidence if indeed true that it has exist. We would be cowed by those belief that Judges can be bought there are many also that has stick on their conscience of upholding of what is the truth? As, we must rely on the members of the Honourable Supreme Court because they wont allowed such scheme to thrive any further.That is my feeling.

This case will have to be handled carefully. There is, a Chinese proverb I believe, that says, “when the elephant fight, the grass suffers”. This case should be pursued if only to defend our constitution but we should be vigilant that our justices won’t sell us short.